Is This Time Different?

[Chuckanut]

In a more serious vein, I honestly believe that what's called "the greatest generation" in Tom Brokaw's words were in fact something very special.

I am often reminded that the people of "The Greatest Generation" - most of my older relatives who are now long gone, - lived through a Great Depression and at least one if not two World Wars.

 

[aja8888]

I am often reminded that the people of "The Greatest Generation" - most of my older relatives who are now long gone, - lived through a Great Depression and at least one if not two World Wars.

Agreed. I'll always remember what my father told me after I was a grown boy and asked about why he was in WWII. He was 17 and working in a coal mine as a youth before the war.

He told me he lied about his age to the recruiter and enlisted since fighting the Japanese seems safer than working in a coal mine in eastern Pennsylvania.

 

[marko]

Well, what goes up, must come down. And what goes down, must come up. So, in a sense they are all "head fakes" as you put it. Probably best not to count your chickens!

By "head fake" I meant what looked like a positive trend that really isn’t, rather than a normal up down of the market. Again, I DO hope the trend up continues but I don’t think it will until we see layoffs and more people afraid to spend. Still too many Help Wanted signs out there

 

[EdL3]

Different, yes. I don’t know when both stocks and bonds have been down at the same time before. Worse, who knows. Society, social norms, & economics are different. To start many under 30 year olds do not believe in home ownership or the need for a car. The pace of technological change is faster than it has ever been.

Just remember your loss is on paper until you sell. I’m sticking with my 55/45 allocation.

 

[Out of Steam]

By "head fake" I meant what looked like a positive trend that really isn’t, rather than a normal up down of the market. Again, I DO hope the trend up continues but I don’t think it will until we see layoffs and more people afraid to spend. Still too many Help Wanted signs out there

I'm not a doomer, but am not convinced that labor shortages and a substantial recession can't exist at the same time.

Just because marketing executives at Facebook get laid off doesn't mean that there will be enough nurses, plumbers, or fast food workers.

 

[kgtest]

One way it's different is we have a bunch of investors that have gone 14 years without any sort of really sustained market drop. The sort of (temporary) courage that builds up with that is going to have some unknown effects. There are a LOT of people that are pretty sure they know what the market is going to do and haven't seen any shocking surprises. Those surprises are coming - they always are.

I'M shocked and surprised that the markets haven't seemed to care much about some ridiculously huge global events - like a freaking pandemic.

I am one of those 14 yr investors. Although I don't like what I see...i also understand in 14 yrs the markets will be higher then today. Maybe I'm wrong in this but I doubt it. I am just going to keep buying in as fast and as much as possible and if that strategy fails me at least I will own a bunch of equity shares.

 

[cat4ever]

Mostly not different.

But Fed action historically need not also battle excessive government spending which is also inflationary.

That part is not typical. And rates rising from a historically low base.

+1
And I'll add is not likely to change any time soon.

 

[Chuckanut]

Just remember your loss is on paper until you sell.

I keep reading and hearing the above. But, I ask myself "how this can be true?" and I can't see it. If I bought a stock, bond, house, artwork, whatever for $1000 and for some reason a year later people will only pay $800 for it, then I have lost $200 at that moment. Period. If I have to sell it to fix a leaky roof, I would only get $800.

I can understand locking in a gain or loss. But, I can't understand how a lower price for something is just on paper.

 

[aja8888]

My ex MIL's husband worked for General Motors for decades and had an executive job in Detroit. He passed in the 50's from a heart attack. She remarried a few years later and that's when I came on the scene (1976) and married her daughter.

Many years passed and we understood she had a boatload of GM stock and was keeping that for her heirs. I recall her two sons, who also worked for GM, telling her to sell it and get into something else as GM was not doing well at the time. Well, she didn't sell and GM went BK. So long stock. She could have sold it and even taking a loss, would have something of value.

When she passed, all she had to leave for her heirs was a small house, some cash, and personal belongings. Her second husband, a great guy, passed just before she did. They were both in their 90s.

 

[RobbieB]

Ah, yes. General Motors.

"What's good for General Motors is good for the country"

Remember that one? So glad I didn't have good enough grades to be hired by Ford. Which led to working the automation business in California!

The king is dead, long live the king.

 

[COcheesehead]

I keep reading and hearing the above. But, I ask myself "how this can be true?" and I can't see it. If I bought a stock, bond, house, artwork, whatever for $1000 and for some reason a year later people will only pay $800 for it, then I have lost $200 at that moment. Period. If I have to sell it to fix a leaky roof, I would only get $800.

I can understand locking in a gain or loss. But, I can't understand how a lower price for something is just on paper.

+1

 

[RobbieB]

It is on paper. It goes up and down.

It's only real when you sell or buy. Then it's cast in stone.

 

[EastWest Gal]

+1.

 

[COcheesehead]

It is on paper. It goes up and down.

It's only real when you sell or buy. Then it's cast in stone.

Folks have to make real withdrawal decisions based on their account size. Paper losses matter and should be managed. Sequence of return risk, according to many, is one of the biggest risks for early retirees. Ignore it if you wish.

 

[RobbieB]

Yeah, me too. I don't like selling equities low. That's why I have bonds.

 

[mijoy]

Yeah it's different.

From my perspective I do not know the significance a "liberal" vs "conservative" administration really impacts the bizarre unpredictability of the stock market. But it would seem that some logic would apply and spending money we do not have will either ultimately (or even immediately) impact the economy in a negative way. This of course is up for debate. Only time will tell if the theory of the government throwing money they do not have at everything works as a wise financial plan or not. Maybe it does. It's a confusing mess. However, the great divide in the west between progressives and conservatives is growing and growing on all fronts. Why?, because it must. The philosophies are diametrically opposed. (won't get specific). The rhetoric over whether we are or are not approaching a potential nuclear exchange and to what extent, is growing every day.

"If the button is pushed there is no running away, there will be no-one to save with a world in a grave". Barry McGuire

Is it different now? I'd say yes. If this war escalates as it appears to be heading towards, the day the news of the unthinkable having happened, happens, the markets will fall like never before (I suspect).

But who knows. Maybe this, like other times when we have seemed on the brink will pass. Maybe I just pay more attention now that I am retired, but I do not think we have ever faced such a time of division (progressive vs conservative, East vs west etc etc). It appears something is going to break.

 

[VanWinkle]

Different, yes. I don’t know when both stocks and bonds have been down at the same time before. Worse, who knows. Society, social norms, & economics are different. To start many under 30 year olds do not believe in home ownership or the need for a car. The pace of technological change is faster than it has ever been.

Just remember your loss is on paper until you sell. I’m sticking with my 55/45 allocation.

1946- double digits just like this year- S&P 500 and 10 year treasuries

 

[COcheesehead]

1946- double digits just like this year- S&P 500 and 10 year treasuries

Yea, that is the “year” that pops up in a lot of the Monte Carlo tools.

 

[Sunset]

You can do much better than Amex and Capital One. Start with depositaccounts.com for better savings rates. Buy brokered CD's backed by name banks at your broker. Schwab, Fido and Vanguard all do this. Buy treasury bills through the same brokers. Can't get much safer than that. Better yields than Amex and Capital One.

+1
Today I bought an Ally CD , it's 2 years at 4.35%
Best Ally.com offered was 3 years at 3.20% and 18 months at 3.15%

It was a no brainer to get the extra 1.15%

 

[Love This Community]

Sunset…4.35% for a 2 year cd is too tempting. Where did you find that? I don’t see it on the Ally website. High yield cd is showing as 3.16% for 18 months

 

[arcyallen]

I keep reading and hearing the above. But, I ask myself "how this can be true?" and I can't see it. If I bought a stock, bond, house, artwork, whatever for $1000 and for some reason a year later people will only pay $800 for it, then I have lost $200 at that moment. Period. If I have to sell it to fix a leaky roof, I would only get $800.

I can understand locking in a gain or loss. But, I can't understand how a lower price for something is just on paper.

Don't get too caught up in the terminology. Think of it this way: There are losses that are "temporary", where the loss still resides in the investment. Then there are "permanent" losses, where you convert that investment to cash. While it's in investment form, it's still fluctuating. When it's in cash, you've stopped the fluctuation and locked in that value. It might be difficult, but I find removing the labels in situations like this and just processing it mentally helps. It is what it is, despite what everyone chooses to call it.

 

[indiajust]

Parts that are new to me, in my lifetime:

Sovereign debt default.
Fiat world, all the developed countries are keynesian currency printers.
Population decline.
Empire transition.

Parts that are not different:

War. Disease. Speculation. Death.

On an absolute basis, life has never been better for humans. On a relative basis, strife and envy are as bad as I have ever seen.

 

[aja8888]

Sunset…4.35% for a 2 year cd is too tempting. Where did you find that? I don’t see it on the Ally website. High yield cd is showing as 3.16% for 18 months

These are "brokered" CDs, found on brokerage sites like Schwab, Fidelity, Vanguard, etc.

 

[Phroig]

Don't get too caught up in the terminology. Think of it this way: There are losses that are "temporary", where the loss still resides in the investment. Then there are "permanent" losses, where you convert that investment to cash. While it's in investment form, it's still fluctuating. When it's in cash, you've stopped the fluctuation and locked in that value. It might be difficult, but I find removing the labels in situations like this and just processing it mentally helps. It is what it is, despite what everyone chooses to call it.

Like Chuckanut, I have a hard time appreciating this notion. If a gal bought Apple 10 years ago, and a guy invested the same amount in GE, isn’t the gal better off (wealthier) than the guy even if neither one’s sold anything?

 

[VanWinkle]

Like Chuckanut, I have a hard time appreciating this notion. If a gal bought Apple 10 years ago, and a guy invested the same amount in GE, isn’t the gal better off (wealthier) than the guy even if neither one’s sold anything?

Yep but it is hindsight to know which one to buy...... It is always clear
after time has cemented the returns. I agree with your premise that the
Apple gal is better off now.